Appellant v First Respondent

CONTRACT - Variation - No consideration where promise is to do no more than what promisor bound to do under pre-existing contract - Illusory consideration.

1 This is an appeal by Leon Holdings Pty Ltd ("Leon Holdings") against an order made in a proceeding in the Civil Claims List of the Victorian Civil and Administrative Tribunal ("VCAT") on 13 December 2007 in favour of the first respondent, William O'Donnell. Appeals from VCAT are governed by s.148 of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act"). Leave to appeal was granted by Evans AsJ on 27 March 2009, in a proceeding commenced by originating motion on 8 April 2008. It appears that part of the reason for the lengthy delay in the granting of leave to appeal was the appellant's reluctance to proceed until its allegations about the inaccuracy of the transcript of the hearing in the Tribunal ("the transcript") had been fully investigated. I deal with this issue below.

2 Mr O'Donnell had applied to VCAT under the Fair Trading Act 1999 seeking "part payment" of $9,900. The boxes ticked in the application form in response to the question "What do you want VCAT to decide and order?" were "Payment of money" and "Review or vary a contract". In his outline of the history of the dispute Mr O'Donnell wrote that he was:

Waiting for part payment for works done. Still waiting. Have posted and hand delivered invoice & still waiting for payment only have 2 day/3 left in finishing. Require money to continue works.

1. The Tribunal notes that the Applicant claims part payment of money alleged to be owed by the Respondent together with work to be done to completion of the contract. The Applicant's claim in total would quantify at approximately $40,000.00. Both parties want to proceed today.
2. The Tribunal accordingly accepts the Respondent's acknowledgment that this application is only part of the Applicant's claim and that the Applicant proposed to make further claim(s) in the event that he is unable to complete the works for which part payment is sought.
3. Upon hearing the evidence of the parties the Tribunal orders the Respondent to pay to the Applicant the sum of $9,900.00 forthwith in part payment of the works.

4 The rather unusual first two paragraphs of the above order arose out of a concern by the Member constituting the Tribunal that the claim being made by Mr O'Donnell in the application before her was only part of the overall contractual entitlement claimed by him. It appeared that Mr O'Donnell said that he estimated that the value of the work done by him was, at a minimum, 80% to 85% of $40,000. Once the Member understood this, and that Leon Holdings was firmly opposed to having Mr O'Donnell finish the demolition work, she raised with Mr O'Donnell the question of whether he wanted to amend his application to claim the larger amount. The Member was obviously conscious of the various problems which could result from having two applications dealing with the same contract. This led to her explaining to Mr O'Donnell in some detail what her concern was about his application and how it could be overcome. Mr O'Donnell was adamant that he wanted to proceed with his first application that day and indicated that he would make a second application later, as had been suggested to him by the Member. After adjourning the hearing "to talk to the Deputy President", the Member announced that she proposed "to sever the claim". The hearing then continued in respect of Mr O'Donnell's claim for "part payment" of $9,900.

5 The evidence before me discloses that on 20 December 2007 Mr O'Donnell made a second application seeking payment of $30,100. Subsequently, the second proceeding was stayed by order of Senior Member Vassie until the hearing and determination of this appeal.

6 Given that different provisions apply to, and that different procedures are followed in, "small claims", I query whether it was appropriate for the Member to allow the claim to be split into two applications, particularly when it was clear that the contract was at an end because Leon Holdings would not permit Mr O'Donnell to complete the demolition work. Thus, the question of a part payment to allow Mr O'Donnell "to continue works" was no longer a live issue before her.[1] However, as I have not heard argument on this issue, I will say no more about it.

7 By its Notice of Appeal dated 6 April 2009 Leon Holdings alleged that the Tribunal had erred in law, first, in respect of certain specific findings made by it in the course of the hearing and, secondly:

by adjudicating the claim made by the First Respondent in circumstances of demonstrated bias and procedural unfairness against the Appellant during the hearing.

The particular alleged erroneous findings and instances of bias or procedural unfairness will be considered in due course below.

8 There was no appearance by, or on behalf of, the first respondent. Although Mr O'Donnell was initially represented in this proceeding by a firm of Melbourne solicitors, that representation ceased when the firm filed a Notice that Solicitor has Ceased to Act on 20 March 2009.

9 Pursuant to a direction from the Court, Peter Lewis Finkelstein, the solicitor acting for Leon Holdings, swore an affidavit on 9 September 2009 in which he deposed to a telephone call he had received from a solicitor, Tim Iser, of the firm of Cohen Kirby & Iser in Bendigo on 17 June 2009. At this time, the appeal had been set down for hearing on 29 June 2009. Mr Finkelstein said that he informed Mr Iser of that date. According to Mr Finkelstein, Mr Iser said that he had been contacted by Mr O'Donnell and that he had been told by Mr O'Donnell that he had "lost interest" in the case and would only wish to be further involved if there might be an order made against him upon the hearing of the appeal. Mr Finkelstein said to Mr Iser that Leon Holdings would not be seeking any orders against his client as such, not even a costs order, and that the only possible detriment to Mr O'Donnell was that he would need to make his claim again at VCAT, in the event that Leon Holdings was successful and this Court sent the case back for a re-hearing. At Mr Iser's request, on 18 June 2009, Mr Finkelstein sent a facsimile to Mr Iser confirming the contents of their telephone conversation. Mr Iser told Mr Finkelstein that so long as he did so he would be advising his client to continue taking no active step in the case.

10 Subsequently, on 22 June 2009, Notice of Trial was posted to Mr O'Donnell's last known address. However, the date for the hearing of the appeal was vacated and it was refixed for hearing on 9 September 2009. Mr Finkelstein said in his affidavit that he had received no further contact or communication from Mr Iser or from Mr O'Donnell, not even an inquiry as to the outcome of the case after the proposed hearing date. In the circumstances, I am satisfied that it was appropriate for the hearing to proceed in the absence of the first respondent.

11 By a letter dated 14 April 2008, the Principal Registrar of VCAT advised the Prothonotary that, although named as the second respondent, VCAT did not intend to take an active role in the proceeding, "except as regards any questions as to costs", and that it would abide the decision of the Court.[2]

12 In an affidavit sworn on 6 May 2008 and filed on behalf of the appellant, one of its directors, Leon Flinkier, made serious allegations about the inaccuracy of the transcript. First, he said that the transcript had been:

re-arranged in sequence, so as to place certain portions in different phases. This has given the impression of a more even-handed approach by the Member.

13 Secondly, Mr Flinkier gave some examples and referred to his typewritten notes of the hearing which had been exhibited to his earlier affidavit sworn on 7 April 2008. These examples included allegations that parts of the hearing had been deleted and that words appearing in the transcript "were not spoken at all".

14 In an affidavit sworn on 19 May 2008, Mr O'Donnell deposed that he was present at the hearing of his claim, that he had read the transcript of the hearing, and that "the transcript accurately reflects what transpired during the course of the VCAT hearing on 13 December 2007".

15 On 24 June 2008, the appellant's solicitors sought access to the original recording of the hearing in order to have an expert consider whether it had been altered. At the suggestion of the expert, six questions were posed about the manner and method of recording, storing, copying and transcribing the words spoken at the hearing. By a letter dated 6 November 2008, the Victorian Government Solicitor responded that for the reasons discussed below the original recording no longer existed. The appellant's expert was therefore of the view that it was impossible to make an assessment as to the extent of any interference with an audio recording.

16 As a result of the above allegations by Mr Flinkier that the transcript had been tampered with, VCAT filed affidavits relevant to this issue and counsel were briefed to appear on behalf of VCAT at the hearing. As stated in the outline of submissions of Mr Moshinsky SC and Mr Young, who appeared on behalf of VCAT, the appearance of the second respondent was:

to make submissions limited to the allegations about tampering with the transcript and denial of procedural fairness.

17 Three affidavits all sworn on 27 July 2009 were filed by the Victorian Government Solicitor on behalf of the second respondent. David Freeman, the Information Technology Coordinator of VCAT, set out in his affidavit the process used at VCAT for the recording of sound at hearings, the "archiving" of the audio files on to a Digital Video Disc ("DVD") and the copying of the audio recording on to a compact disc for use by the transcript provider. Mr Freeman explained that the sound in all 48 hearing rooms was digitally recorded by specialised court recording software on to a hard drive on a "stand-alone" computer system, consisting of 12 dedicated computers each recording from four separate hearing rooms. The software consolidated the audio recordings from the four hearing rooms into a single file in proprietary format, each file being five minutes in length. Separate audio files were not created for each hearing room.

18 Mr Freeman deposed that in order to make space on the dedicated central server, the 100 or so audio files created each day on each of the 12 computers were "archived" on to a DVD, usually on the next day. When a party made a request for a hearing to be transcribed, VCAT produced a compact disc of the audio recording of that hearing from the DVD using its specialised software, which was then provided to the transcript provider.

19 Mr Freeman deposed that the specialised software could not be used to alter the sequence, remove parts or edit the audio files. He also deposed that although it was possible to delete the five minute long audio files created by the specialised software during the course of the day, what would be deleted would be the audio recording of each of the four hearing rooms and not just the audio recording of one particular hearing room.

20 James William Donald Nelms, the Acting Principal Registrar of VCAT, set out in his affidavit the procedures used at VCAT for producing a transcript of a hearing. He noted that it was stated on this transcript that it had been "released unrevised by Deputy President Steele in Member West's absence".

21 Michele Marie Rowland, an Australian lawyer employed by the Victorian Government Solicitor deposed in her affidavit to having listened to the compact disc of the audio recording of the hearing and compared it with the written transcript. She listed some minor differences between the two.

22 The appellant's written submissions dated 31 August 2009 referred to the "serious assertions" made by Mr Flinkier that the transcript was "not an accurate representation of the hearing". It was noted that the "original compact disk containing the recording of the hearing itself has been deleted, so that the compact disk used for the transcription is but a copy of the original recording". In response, it was pointed out, in the second respondent's outline of submissions dated 4 September 2009, that Mr Freeman's evidence showed that this was not correct because there had never been an "original compact disk containing the recording of the hearing itself".

23 Counsel for the second respondent also submitted in their written outline that there was simply no evidence to support the appellant's allegation that the audio recording of the hearing at VCAT had been interfered with. The appellant did not say by whom, when or how the transcript had been altered.

24 At the commencement of the hearing before me, Mr Gilligan of counsel, who appeared for the appellant, announced that the "allegation in relation to the veracity of the transcript" would not be proceeded with. He said that this information had been conveyed to the other side "the other day". This was a reference to the day before the hearing.

25 Although the issue was no longer being pressed by the appellant, Mr Moshinsky urged me to make a finding in respect of the allegation, given its serious nature, that it now appeared on the public record, and that it had been persisted with by the appellant for over a year.

26 In my opinion, there are compelling reasons for dealing with the allegation about interference with the transcript, as submitted by Mr Moshinsky. I am quite satisfied from the unchallenged evidence of Mr Freeman and Mr Nelms that the allegation is unsustainable. I find that there has been no tampering or interfering with the audio recording of the hearing before Member West on the afternoon of 13 December 2007 and that the transcript is a reasonably accurate record of the words spoken, and the sequence of events, at that hearing.

27 It is not at all surprising, in my view, that a participant could be confused in his or her recollection of the words spoken and the sequence of events, particularly where the participant may have become agitated and upset during the hearing. But there is simply no basis, in my opinion, to prefer Mr and Mrs Flinkier's recollection to the written transcript. One example will suffice. In his second affidavit, Mr Flinkier swore that it was "not correct at all" what was said in paragraph 2 of the Tribunal's order about Leon Holdings acknowledging that this application was only part of Mr O'Donnell's claim and that he was proposing to make a further claim. Yet, the transcript records the following exchange after the Member returned from talking to the Deputy President:

MEMBER: Right. I propose to sever the claim. You may proceed on your claim for $9,900 and it is to be acknowledged by you, Mr Flinkier that you acknowledge that that is only part of the claim. There will be another claim for the balance.

MR FLINKIER: I don't understand Ms West.

MEMBER: I will proceed with this claim, sir.

MR FLINKIER: Well, I ---

MEMBER: You may defend it.

MR FLINKIER: I may defend it?

MEMBER: But as I'm telling you now ---

MR FLINKIER: Yes.

MEMBER: So that there is no confusion, I am severing the claim. He is allowed to proceed on a part payment. If he is successful, you are on notice that I give him permission to bring a claim for the balance.

MR FLINKIER: Yes, I don't mind as long as I can present my side of it.

MEMBER: You will present your case, absolutely, sir. Please do so now.

Everything points to the conclusion that Mr Flinkier's recollection of this exchange is faulty and that the transcript is an accurate record.

28 Although the evidence about the dispute was very confusing in some respects, there was a good deal of common ground. Leon Holdings owned the property at 22 Hopkins Street, Footscray on which was erected a single storey office block. Mr Flinkier and his wife, an elderly couple, were the shareholders and directors. They were keen to have the office block demolished by 30 June 2007. Mr Flinkier placed an advertisement in the Age newspaper on 25 November 2006. The relevant part read:

Wrecker to remove single storey office block with easy access, covering 1875 sqm in Footscray, Immed. full payment on completion.

29 Mr Flinkier received three offers, including one from Mr O'Donnell of $20,000, which he said was ridiculously cheap. Mr Flinkier said that Mr O'Donnell told him that it was going to take a week or two to obtain the demolition permit and that he could only offer that price if he could go in straight away and strip out everything he wanted from the building, because he did not need a demolition permit for that. Mr Flinkier said that he told Mr O'Donnell that he wanted him to start as soon as possible and to finish the demolition within a couple of weeks and that, as stated in the advertisement, Mr O'Donnell would receive immediate full payment on completion. Mr Flinkier said that Mr O'Donnell agreed that he could do it within a couple of weeks although there could be "a week or so delay because it's coming on to Christmas". Mr Flinkier then accepted Mr O'Donnell's quotation.

30 On 12 December 2006, Mr O'Donnell sent to Leon Holdings a facsimile which was expressed to be from:

William O'Donnell

Building Contractor

...

Demo Division.

After identifying the job and the address, the facsimile continued:

This Contract is to demolish and remove office block

Description:

Clear Office Block to concrete Floor Level at 22 Hopkins Street Footscray

Plus clear vegetation.

Payment on Completion

Total Contract $20,000 plus GST.

Start Date A.S.A.P.

31 In early January 2007, Mr O'Donnell came to Mr Flinkier's home seeking a cheque for $715 to pay for a report from Peter Lindburgh of Final Inspect on the presence of asbestos. According to Mr Flinkier, Mr O'Donnell said the report was required for the demolition permit. He agreed to pay because Mr O'Donnell's price had been cheap, and because Mr O'Donnell told him that it was only a formality, as the whole building was going to the tip. Mr O'Donnell said that he had posted his invoice to Mr Flinkier and had been told the cheque was in the mail, but it never arrived. Therefore, he had to chase it up personally. Mr O'Donnell produced a copy invoice dated 20 December 2006 for $715 for "Building Inspection Report Asbestos".

32 Mr Flinkier alleged, and Mr O'Donnell agreed, that he quickly salvaged any valuable items from the building. It was not established how much income this brought Mr O'Donnell. But there was evidence that Mr O'Donnell would have received about $9,500 for the materials to be recovered from the demolition itself - $3,000 for the 60,000 bricks left on site, $3,000 for 20 roof tresses and $3,500 for 70 steel posts.

33 Mr O'Donnell said that he obtained a quotation for the removal of the asbestos. By a tax invoice purportedly dated 2 February 2007 he charged Leon Holdings $5,000 for "asbestos removal at factory site". Mr Flinkier said that he had only received that invoice "in the last few weeks". No payment had been made. It was not disputed that the work of removing the asbestos, which was only in the toilet section, had not actually been carried out in February 2007. Mr Flinkier said that Mr O'Donnell had told him that such work did not have to be done at that stage.

34 Mr O'Donnell said that he then had to find "a licensed demolisher who had the licence number to get the permit for me". He said that although he could "salvage a lot of materials", when it came to "structure you need a licence". He said that the licence was issued in the name of "Black Demolitions".

35 Mr O'Donnell gave some rather confused evidence that he often used either Mr Black or his son in law, Nathan, to obtain a permit for demolition work. On this occasion he dealt with Nathan, as Mr Black was overseas. He also sub-contracted part of the work to Nathan's firm. He produced a handwritten document which relevantly read:

Nathan

...

Thank you again for your business.

Job Address: 22 Hopkins St Footscray

...

Feel free to phone me with any other questions.

Contract price $8000. Total to bring walls down.

It was signed by Mr O'Donnell and purportedly dated 7 February 2007.

36 However, Mr Flinkier said that once the building had been stripped, work come to a stop. He said that he kept ringing Mr O'Donnell who kept promising to carry out the demolition but it never happened.

37 According to Mr Flinkier, approximately six weeks before 30 June 2007, that is, in mid May, just after he came out of hospital, he again contacted Mr O'Donnell. He said that, in desperation, he offered to double the price to $40,000 if Mr O'Donnell finished the job by 30 June 2007. Mr Flinkier said that Mr O'Donnell agreed that he did not have the equipment or the expertise, and that he had to sub-contract to others. Therefore, he told Mr O'Donnell not to accept if he could not meet this deadline. He did not want to lose more time. Mr Flinkier said that Mr O'Donnell rang him back and said that he would start "tomorrow". Mr Flinkier saw Mr O'Donnell and another man on the site the next day. According to Mr Flinkier, Mr O'Donnell rang him that night asking for an advance of $2,000 "just to pay wages". Mr Flinkier refused. He said that he told Mr O'Donnell he would "get the whole lot, as long as it's by the due date". The next day, he received a telephone call from Mr O'Donnell's labourer saying Worksafe had closed down the job and asking to be paid for his one and a half day's labour. Mr Flinkier said that he did not hear from Mr O'Donnell and when he went to the site it appeared to be abandoned.

38 Mr O'Donnell was uncertain as to the date of the variation of the contract price. He thought that it was in about April or May 2007. Mr O'Donnell agreed that the contract price had been doubled to $40,000 as long as he finished it by the end of June. He said that at this time he asked Mr Flinkier for some money and was told that he would be paid at the end of the job. Mr O'Donnell said that he was not happy with this, but he told Mr Flinkier that he would "try and get by".

39 Mr O'Donnell said that more work was then done in demolishing the office block. Only the brick walls and "a tiny portion of roofing" was left on the main building. A small room at the back also remained. According to Mr O'Donnell "85 per cent of the work" had been carried out. He said that he then approached Mr Flinkier seeking a progress payment of "$5000 or $2000". Mr Flinkier said that he had to wait until he had finished. Mr O'Donnell replied:

40 Because Mr Flinkier refused to make any progress payment, Mr O'Donnell said that he stopped work on 5 June 2007. Before he had left, Worksafe came to the site and gave him a prohibition notice to stop work because of the asbestos. Mr O'Donnell said that the asbestos was removed by Ancor Asbestos Removal on 12 June 2007. It appears from the transcript that Mr O'Donnell referred to documents from Worksafe and to documents relating to the approval of this work, but they did not find their way on to the Tribunal file. According to Mr O'Donnell, Mr Lindburgh later inspected the premises to ascertain that the asbestos had been indeed removed but he would not release his report until he had been paid. It appears from the transcript that there were documents which showed that Mr O'Donnell requested this report in early August 2007, but again they did not find their way on to the Tribunal file.

41 Mr Flinkier said that Mr O'Donnell had been "thrown off the site" by Worksafe. He said that he had been told by the City of Greater Geelong ("the Council") that it had been notified by Worksafe of the problems and that it had then issued a Building Order to Stop Work and a Building Notice both dated 21 June 2007.

42 The Building Order to Stop Work was addressed to Leon Holdings as the owner and Mr O'Donnell as the "Person Apparently in Charge of the Site". It was made pursuant to s.112 of the Building Act 1993. It alleged a contravention of s.25A of that Act in that:

Demolition works have commenced without notification of a change of Building practitioner to carry out the works.

It also alleged a contravention of reg.318 of the Building Regulations 2006 in that the owner had not notified the relevant building surveyor within 14 days after a change of builder carrying out building work. It further alleged that:

The Demolition Works being carried out is [sic] a danger to the life, safety or health of members of the public or any person entering the site.

43 The Building Notice was addressed to Leon Holdings as owner. It was issued pursuant to s.106 of the Building Act. It alleged that:

Demolition works are being done by a person who is not a registered Practitioner.

It also required Leon Holdings to show cause why the building being demolished should not be re-erected.

44 Mr Flinkier sought to produce a letter from Andrew Kinghan from the Council dated 11 December 2007 (two days before the hearing at VCAT). It stated that on 3 April 2007 the Council "was appointed to issue a Building Permit ... to David Black at the above mentioned address for a Demolition Permit". According to the letter, Mr Black was a registered practitioner, but he did not carry out any works at the Hopkins Street address. Mr Kinghan also stated in his letter that:

As part of COGG [City of Greater Geelong] assessment of the Building Permit, we never requested a Asbestos report of the site and never request a Asbestos report for any Demolition Permit. (Council also never received a copy of this report).

However COGG always request the Demolition works to be carried out by a Registered Practitioner and requests any Asbestos to be removed from site by VTHC recognised Asbestos removalist.

COGG was made aware that this was not the case, the works were being carried out by a person who is not a registered practitioner and was not a recognised Asbestos removalist. Hence COGG issued a Building Notice and Building order to stop works.

45 Mr Flinkier also sought to rely on a letter from Mr Black complaining to him about the unauthorised use of Mr Black's name in respect of "illegal works being carried out on" the property of Leon Holdings. Mr O'Donnell denied that he was working as David Black.

46 Mr Flinkier also said that he had spoken to Mr Black, who said he had quoted Mr O'Donnell $8,000 to get down the two big triangular supports. Mr Black also told Mr Flinkier that he had spent $600 getting a permit.

47 When the Member asked Mr O'Donnell what the $9,900 would go to, he struggled to list how much he was out of pocket, but the following approximate amounts emerged as debts which he had to pay:

(a) $1000 to Mr Black, the demolisher, who "holds the licence",

(d) $715 to Mr Lindberg for his second report on asbestos.

In addition, he said that he had paid some of his workers "a little bit of money" and that he had paid $1,650 for three bins at $550 each. Thus, according to Mr O'Donnell's estimates, all of this totalled $10,365, plus the amount for wages. In fact, the excavator's invoice which was part of the Tribunal file, totalled only $1765.50 for three days' work on 4, 5 and 6 June 2007. Also, if Mr Flinkier's evidence was accepted, the amount payable to Mr Black was $600 not $1,000. These two adjustments reduced the identified amount paid and payable to $9,730.50, plus an amount for wages.

48 By a tax invoice No.1234 purportedly dated 20 April 2007 Mr O'Donnell charged Leon Holdings $40,000 plus GST for:

Demolition of factory site -

22 Hopkins Street Fitzroy [sic] Vic".

At the foot of the typed invoice the following comments appeared:

The balance due, has been increased from $20,000 to $40,000 as per your phone conversation one month prior, stating that the job needed to be concluded promptly.

It was not clear when this invoice was sent to Leon Holdings, but on any view it must have been back-dated. No one suggested that the telephone conversation occurred in March 2007 - "one month prior" to 20 April 2007.

49 It was not until after Mr O'Donnell had explained his claim, as described above, and Mr Flinkier had responded, that Mr O'Donnell mentioned for the first time, at page 60 of the transcript, that Mr Flinkier had agreed to pay him a progress payment of $5,000 at the same time as he doubled the contract price. Not only was this claim only belatedly mentioned by Mr O'Donnell after each side had given their version of events, it was also contrary to his earlier evidence that Mr Flinkier had refused his request for some payment at the time the contract price was doubled.

50 It appears that Mr O'Donnell then handed to the Member another document. On the Tribunal file was another tax invoice No.1235 again purportedly dated 20 April 2007. By this invoice Mr O'Donnell charged Leon Holdings $35,000 plus GST being the balance due on the contract price of $40,000 for the same job description less

This time the comments at the foot of the typed invoice read:

The balance due, has been issued to cover costs of the work undertaken so far. We are now requesting monies to be paid before any further work will be completed. Payment is to be made within 7 days.

It was not clear when, or even if, this second invoice was sent to Leon Holdings.

51 Commencing at page 70 of the transcript, the Tribunal gave the following reasons for finding in favour of Mr O'Donnell:

MEMBER: I've heard the evidence from both parties. I propose to make an order in relation to this matter for a sum of money because I am satisfied that he has done sufficient work to justify a part payment. Now, if you would like him to complete the work you can negotiate that with him now. ...

I find that he is not in breach of his contract. I find that he answered your advertisement for a wrecker. I find that you entered into a contract. I accept what you say that at that stage you said that time was of the essence. I am also equally satisfied that as an inducement for him to finish by 30 June, you doubled the stakes but you doubled it fully aware that there was a down payment due of $5,000. ... You resiled from that. ...

I'm finding that the contract was varied and I'm finding that every step of the way, Mr O'Donnell was endeavouring to complete the contract to your specifications. I find your attitude in withholding all payment from him to be unfair in the circumstances. I believe your construction of the contract to be unfair. I believe that the applicant is entitled to be paid alone on what he's out of pocket. He's way in excess of the $9,900 that he claims for part payment.

I'm ordering and directing that you pay him the sum of $9,900 forthwith in part payment of his claim and I will say no more about it. I have heard the evidence. It is absolutely incumbent that you understand that I have given you every opportunity to consider the claim from his point of view. The law does not require me to always interpret contracts the way you would like them to be interpreted.

I am satisfied that this was a work in progress. He was doing the best he could and other circumstances intervened and it is inappropriate for you to withhold all moneys knowing, as you know, that he's done work.

52 Although the appellant subsequently sought written reasons from the Tribunal, its request was refused on the basis that, pursuant to cl.28HH of Part 7AA of Schedule 1 to the VCAT Act, the Tribunal was:

not obliged to give a person written reasons for an order made in a proceeding relating to a small claim unless the person has made a request to the Tribunal for written reasons for orders that may be made in the proceeding before or at the time of the giving or notification of the Tribunal's decision in the proceeding_._[3]

Mr Flinkier did not dispute that no such request had been made by him.

53 The questions of law set out in the Notice of Appeal were that the Member erred in law in respect of the following findings:

1. The finding made by the said Member to the effect that the contract between the parties, the subject of the said Order, had been subsequently varied by them so as to constitute such contract as one based upon instalments by way of progress payments (where the first instalment was required to be not less than $5,000.00) instead of being a lump sum single payment at $40,000.00 upon final and full completion of the contract by the First Defendant.
2. The finding made by the said Member that the First Respondent had contracted with the Appellant in his capacity as a "wrecker" rather than as a "demolitioner", that there was a legal distinction between these two expressions, and that, as a consequence, there was no legal obligation upon the First Respondent to obtain a Demolition Permit before demolishing the building involved in the contract between the parties the subject of such Order.

54 It is convenient to deal with these findings in reverse order. The alleged error of law raised by the second finding was said to be shown by the following exchange between Mr Flinkier and the Member:

MR FLINKIER: May I ask Will, then, if he has - are you a licensed demolisher? Are you?

MEMBER: It's not relevant, sir. He had a contract with you to demolish your property.

MR FLINKIER: Yes, but he got put off by the council because he wasn't licensed. For goodness sake, of course that affect me, ma'am, with respect.

MEMBER: It doesn't.

MR FLINKIER: I'm asking you if he's licensed because if he's not licensed he has no right to quote me for the job. I would never have given it to him. I assumed he was qualified.

MEMBER: You asked for a wrecker. Anybody can be a wrecker.

MR FLINKIER: No, not a licensed one.

MEMBER: You didn't ask for a licensed wrecker. You asked for a wrecker. He answered your advertisement and as you said, he offered to do it for a ridiculously cheap amount.

55 It seems to me that the situation is not as simple as the Member suggested. First, the definition of "building work" in s.3 of the Building Act means "work for or in connection with the construction, demolition or removal of a building".[4] Second, s.16(1) of the Building Act provides that:

A person must not carry out building work unless a building permit in respect of the work has been issued and is in force under this Act and the work is carried out in accordance with this Act, the building regulations and the permit.

Third, reg.304 of the Building Regulations 2006 provides that:

(1) An application for a building permit to demolish or remove a building must be accompanied by 3 copies of -

(a) an outline and a description of the building or part of the building to be demolished or removed; and

...

(e) a written description of the demolition or removal procedure; and

(f) evidence that the demolisher has the necessary knowledge, experience, equipment and storage facilities to properly conduct the demolition operations.

56 No doubt the best way for a demolisher to satisfy the requirements of reg.304(1)(f) was to become registered as a building practitioner under s.169 of the Building Act. Pursuant to reg.1503, the appropriate prescribed qualification for the purpose of s.170 of the Building Act was to be found in Schedule 7 to the Building Regulations. The most relevant category of building practitioner in that Schedule at the end of 2006 was item 17 - Category of builder, class of demolisher (low rise buildings).[5] The prescribed qualifications were and are:

a certificate issued by the Board, after examination of the applicant, certifying that the applicant has adequate knowledge and experience to -

(a) demolish buildings having a rise in storeys of not more than 2, excluding special buildings; and

(b) undertake demolition stripping work of not more than 2 storeys of any unoccupied building

57 In my opinion, the distinction drawn by the Member between "a wrecker" and "a demolisher" was not valid. In their relevant meanings, they are synonyms. The Shorter Oxford English Dictionary on Historical Principles[6] relevantly defines "a wrecker" as "a person who wrecks or ruins a structure ... a demolition worker", and "demolish" as to "destroy (a building etc) by violent disintegration of its fabric". The Member therefore erred in law when she said that "Anybody can be a wrecker", because demolishers (or wreckers) either have to be registered as building practitioners or have, as a minimum, the necessary knowledge and experience to properly conduct the demolition.

58 As a consequence of the Member's view on this issue, the question of whether Mr O'Donnell had obtained, and whether he was required to obtain, a building permit naming him as the demolisher, and the question of Mr Black's role as the registered practitioner for the purposes of the building permit and his apparent absence from the site, which appears to have led to the issuing of the Building Notice and Building Order by the Council, were not properly investigated during the hearing. Mr Flinkier was presumably seeking to raise the issue of the affect that Mr O'Donnell's lack of registration had on the enforceability of the contract, and that arguable issue was not dealt with by the Member. In my opinion, therefore, the Member erred in law when she treated this issue as irrelevant as a result of her erroneous view that "anybody can be a wrecker".

59 Returning then to the first finding, although the Member did not expressly say so, it is clear that she found that the contract had been varied to include a term that Leon Holdings was obliged to make a progress payment of $5,000. There was evidence justifying such a factual finding and it was a matter for the Member whether or not she accepted Mr O'Donnell's claim.

60 Mr Gilligan submitted, however, that the way in which this issue was handled after it arose at such a late stage meant that Mr Flinkier never had the opportunity to express his disagreement with Mr O'Donnell's claim about him agreeing to make a progress payment of $5000. He further submitted that the tax invoice No 1235 was not shown to Mr Flinkier and that his attention was not drawn to the need to respond to the variation claim. I do not agree. In my opinion, the transcript shows that Mr Flinkier was several times given the opportunity to respond to this belated claim, and whilst Mr Flinkier may not have actually said that he denied agreeing to make a progress payment, I am satisfied that the Member was under no misapprehension that Mr Flinkier's attitude to the variation claim was that it was laughable. Further, I consider that Mr Flinkier would well have understood from what had already occurred in the hearing that he was entitled to see the tax invoice No 1235. In any event, it is by no means clear to me that he had not seen it before given his statement that:

When I got that thing and it said "Progress payment", I nearly died laughing.

Therefore, I do not accept the appellant's reasoning behind the submission that this finding of the Member demonstrated an error of law.

61 However, in my opinion, there are other errors of law involved in the Member's decision arising out of this finding about a variation of the contract. First, I consider that there was no evidence that a promise by Leon Holdings to make a progress payment of $5,000 (assuming that such a promise was made) was supported by any consideration. As Mason J (as his Honour then was) said in Wigan v Edwards:[7]

The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration.[8]

An important qualification to the general principle is that a promise to do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under that contract.[9]

62 In mid December 2006, Mr O'Donnell had agreed to demolish the building for $20,000 plus GST, with payment on completion. As the Member found, "time was of the essence" and Mr Flinkier's uncontradicted evidence was that Mr O'Donnell agreed to demolish the building within a couple of weeks after allowing for a delay over Christmas. Yet the work had not been finished by whenever Mr Flinkier offered to double the contract price - mid May 2007 as he maintained, or some time in April as possibly suggested by Mr O'Donnell. By either time, Mr O'Donnell was clearly in breach. Agreeing to finish by 30 June 2007 was no more than he was already contractually obliged to do. The evidence did not reveal any bona fide compromise of a disputed claim. Therefore, Mr O'Donnell gave no consideration for the promise of a progress payment and the finding that the contract had been varied to include such a term was an error of law.

63 Secondly, the variation found by the Member was that Leon Holdings became contractually bound to make a progress payment of $5,000. Yet, the claim by Mr O'Donnell and the order made by the Tribunal was that Leon Holdings was liable to pay $9,900. The Member's decision appears to be based on the finding that Mr O'Donnell had "done sufficient work to justify a part payment" of $9,900, and that he was out of pocket "way in excess" of $9,900. If, as the Member found, based on Mr O'Donnell's evidence, the contract was varied to allow for a progress payment of $5,000, then, in my opinion, it was an error of law for the Tribunal to order Leon Holdings to pay $9,900 in part payment.

64 Mr O'Donnell's application to VCAT was one made as a "small claim"[10] under the Fair Trading Act 1999. Under that Act, the Tribunal had the power to vary any term of a contract,[11] or to make any order it considered fair including varying a contract to avoid injustice.[12] Thus, it was open to the Tribunal to vary the contract by adding an obligation on Leon Holdings to make a progress payment of $9,900.

65 However, I do not consider that this is what the Tribunal did. Whilst there are references by the Member in her oral reasons to her finding that Mr Flinkier's attitude to withholding all payment was "unfair" and to his construction of the contract being "unfair", read as a whole, the reasons do not, in my opinion, purport to rely on the powers given to the Tribunal by the Fair Trading Act. That Act was never mentioned - neither during the hearing, nor in the Member's reasons. Mr Flinkier was never asked to address the issue of the Fair Trading Act. Furthermore, the language of the reasons is not apposite to reliance on the Fair Trading Act. Thus, for example, the Member says "I'm finding that the contract was varied" not "I am varying the contract".[13]

66 Before considering the particular allegations of "demonstrated bias and procedural unfairness" set out in the Notice of Appeal, it is appropriate to mention the relevant provisions of the VCAT Act. The Tribunal must act fairly (s.97). It is bound by the rules of natural justice (s.98(1)(a)) except to the extent that the VCAT Act or an enabling enactment authorises a departure from such rules (s.98(4)). It is not bound by the rules of evidence or any practices or procedures applicable to courts of record, except to the extent that it adopts those rules, practices or procedures (s.98(1)(b)). It may inform itself on any matter as it sees fit (s.98(1)(c)). It must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of the VCAT Act and the enabling enactment and a proper consideration of the matters before it permit (s.98(1)(d)). Subject to the VCAT Act, the regulations and the rules, it may regulate its own procedure (s.98(3)). It must allow a party a reasonable opportunity to call or give evidence (s.102(1)(a)), to examine, cross-examine or re-examine witnesses (s.102(1)(b)) and to make submissions to the Tribunal (s.102(1)(c)). Evidence may be given orally or in writing, and if the Tribunal requires, must be given on oath or by affidavit (s.102(3)).

67 As the Tribunal is bound by the rules of natural justice, it must be "impartial and unbiased" and must afford each party "a fair opportunity to be heard before a decision or order is made",[14] or "a reasonable opportunity to present his or her case".[15]

68 Bias can be actual or apprehended. In the Notice of Appeal the word "demonstrated" was used. However, at the outset of his submissions Mr Gilligan made it plain that the appellant's case was one of apprehended bias. It is now well established that the bias rule is infringed if a fair minded lay observer might reasonably apprehend that the Tribunal might not bring an impartial and unprejudiced mind to the resolution of the question that must be decided.[16] Further, as Kirby J has said of "the fictitious bystander to whom the courts defer":

Such a person is not a lawyer. Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided ... Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their representatives, which was taken out of context. Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious.[17]

69 The first ground of apprehended bias and procedural unfairness was that the Tribunal Member breached the rules of natural justice by permitting Mr O'Donnell to give hearsay evidence (concerning his dealings with Mr Lindburgh) but not permitting Mr Flinkier, on behalf of Leon Holdings, to give hearsay evidence (concerning his dealings with Mr Black).

70 Mr O'Donnell's hearsay evidence about a telephone conversation with Mr Lindburgh "three days ago" began on page 15 of the transcript and continued until the middle of page 18. Essentially, Mr O'Donnell was giving evidence about what Mr Lindburgh had said to him about what he had been told by Mrs Flinkier was going to be alleged against Mr O'Donnell, namely, that the people who removed the asbestos were not licensed.

71 At page 41 of the transcript Mr Flinkier attempted to give evidence about what Mr Black had said to him about Mr O'Donnell wrongfully working under Mr Black's name. The following then occurred:

MR FLINKIER: No, he told me - he asked me to call him and I discussed it with him and he ---

MEMBER: So you have no evidence. You're making these allegations ---

MR FLINKIER: No, no, no. This is what Mr Black told me when I rang him.

MEMBER: I don't care what Mr Black said.

MR FLINKIER: He asked me if I'd call him

MEMBER: It is not evidence. What you tell me Mr Black told you is not evidence before this tribunal. Do you have any evidence to substantiate the allegation that this gentleman has been working as David Black.

MR FLINKIER: I'd like to see if he has licence to do it because he didn't. He wasn't licensed according to the Geelong Council that stopped work on him.

...

MEMBER: So your point is that he applied for a licence at Geelong Council, therefore ---

MR FLINKIER: No, he didn't apply for it. He got this David Black to. I'm going on telling you what David Black told me.

MEMBER: Whatever David Black told you is not evidence before this tribunal. If you are suggesting that Mr Black in some way is alleging that the applicant has been trading as him, then Mr Black has his rights in law against Mr O'Donnell.

MR FLINKIER: Yes, but I ---

MEMBER: That's got nothing to do with you, sir. It's got nothing to do with your contract.

72 It was up to the Tribunal whether or not to allow hearsay evidence. But, in my opinion, whatever course was adopted, it had to be even-handed and treat both parties the same. I consider that the Member did not do this when she refused to listen to Mr Flinkier's hearsay evidence about what Mr Black said, after she had received without demur the hearsay evidence from Mr O'Donnell about what he was told by Mr Lindburgh. Although the latter evidence was really irrelevant, the Member gave no indication that she was rejecting it. The important point is that because of the way in which the Member handled the hearsay evidence issue, the appearance was given that she was not treating both parties in the same way. Thus, I consider that a fair minded lay observer might reasonably conclude that the Tribunal might not bring an impartial and unprejudiced mind to the resolution of Mr O'Donnell's claim when she treated Mr Flinkier and Mr O'Donnell so differently with respect to the giving of hearsay evidence.

73 The second ground of apprehended bias and procedural unfairness was that the Member reached a decision before hearing all of the oral evidence that Mr Flinkier desired to give and before receiving all of the documents that he wished to tender. The appellant relied on a number of examples of the Member expressing views that allegedly indicated that she had already made up her mind in favour of Mr O'Donnell.

74 First, at page 24 of the transcript, which was about a third of the way into the hearing[18] Mr O'Donnell attempted to list what he had paid and what he owed in respect of the demolition work. He then said that he had paid "for a few things". He is then recorded in the transcript as adding:

Like, I'm not here to fund this project.

MEMBER: Yes, Well, it sounds to me like you have.

75 This comment was made by the Member before anything had been said by Mr O'Donnell about a variation to require a progress payment and when the written contract relied on by him clearly stated "Payment on Completion", and before Mr Flinkier had put his company's case. It was submitted that this comment gave rise to a reasonable apprehension of bias. I do not agree. Whilst it was, perhaps, an unwise comment to make so early in the hearing, it does not indicate, in my opinion, that the Member had made up her mind about the claim.

76 Very soon after this, at page 27 of the transcript, when discussing whether the claim should be just for a part payment with a second application for the balance, the Member said to Mr Flinkier:

He's not going to be allowed to finish the job and he is out of pocket well in excess of the claim that he makes.

77 It was submitted that on the figures given by Mr O'Donnell there was no basis for this conclusion. On his own evidence, he was "out of pocket" for very little. He had paid out $1,650 plus some amount for wages and had identified creditors totalling $8,715, although in fact they may have totalled only $8,080.50. Therefore, it was submitted, it was difficult to understand how the Member reached the conclusion that Mr O'Donnell was "out of pocket well in excess" of his claim. It was submitted that this statement was indicative of the fact that the Member was favouring Mr O'Donnell's claim before she had heard from Mr Flinkier.

78 Again, I do not agree with the submission concerning this comment by the Member. Depending on how much, if anything, was paid in wages, the total amount paid or payable by Mr O'Donnell was very likely to exceed $9,900, although it was probably not "well in excess" of that amount. Thus, the Member was ill advised to make such an observation without carefully adding up the amounts suggested by Mr O'Donnell. However, in all the circumstances, I do not consider that the fair minded lay observer would consider that this possibly exaggerated comment indicated that the Member had already decided in favour of Mr O'Donnell.

79 The third instance of alleged prejudgment relied on by the appellant occurred soon after Mr Flinkier started to explain his company's position. Mr Flinkier said, at page 29 of the transcript, that Mr O'Donnell was in breach of the contract. The following exchange then ensued:

MEMBER: He has done - he has performed some work if I accept his evidence, in accordance with that contract which ---

MR FLINKIER: Yes but it - but it was on the basis ---

MEMBER: For which he has received no payment whatsoever.

80 This particular complaint can be readily disposed of, in my opinion. The Member's comments were qualified by the words "if I accept his evidence". There was, therefore, no indication that the Member had made up her mind. She was merely putting a possible point of view to give Mr Flinkier the opportunity to meet that argument.[19]

81 Next, the appellant complained about the following statement by the Member at page 30 of the transcript. She said to Mr Flinkier:

MEMBER: I am concerned that you understand, sir, that what he has put to the Tribunal on one view, is unable to be challenged. He had a contract with you for $40,000.

82 Again, there is no substance, in my opinion, in this complaint. Although it could have been better worded, the sense of what the Member was saying is clear, namely, that it was common ground that Mr O'Donnell had a contract with Leon Holdings for $40,000. It was "unable to be challenged" because it was not disputed.

83 The next indication of prejudgment was said to be a statement also appearing at page 30 of the transcript. The Member said that she was asking a rhetorical question and continued:

He has to be entitled to something for the work that he's done.

84 This was not necessarily a statement of a fixed or formed view, in my opinion. The Member prefaced her statement by saying it was a rhetorical question. Thus, it was no more than a possible argument which Leon Holdings would have to meet.

85 The sixth instance of alleged prejudgment occurred about halfway through the hearing at page 37 of the transcript. By this time, the Member had decided that the claim would be severed and that there would be a claim for a part payment with another later claim for the balance. Following this ruling, Mr Flinkier was for the first time able to put the appellant's case. He is recorded on the transcript as speaking for nearly three pages with virtually no interruption. However, when Mr Flinkier sought to refer to the letter from the Council dated 11 December 2007, the Member said:

MEMBER: I'm sorry, let's not go there. I need to understand the chronology of events that led him to bring this claim against you. I'm not interested in going back retrospectively from something you were told two days ago.

MR FLINKIER: No, no, no.

MEMBER: I want to know what happened.

MR FLINKIER: This is confirmation, ma'am, that what had gone on ---

MEMBER: No, it's your rationalisation retrospectively that everything is soured because of what ---

MR FLINKIER: I meant, you have a look at the letter ---

MEMBER: Bring me up to speed from the beginning rather than making assumptions retrospectively.

86 I consider that this is a more serious complaint about prejudgment. Not only did the Member stop Mr Flinkier referring to relevant correspondence, apparently without looking at the letter herself or hearing what it said, she also expressed the view that Mr Flinkier had retrospectively rationalised his version of events because things had turned sour. I consider that there is a real, not remote, possibility[20] that a fair minded lay observer might reasonably have apprehended that this statement by the Member indicated that she was not bringing an impartial and unprejudiced mind to deciding Mr O'Donnell's claim because on this occasion she expressed a concluded, not a tentative, view about Mr Flinkier's case before hearing all of his evidence. Nothing that happened thereafter, in my opinion, would have removed the perception that the Member was by then so committed to that conclusion that she was incapable of altering her view "whatever evidence or arguments" might have been presented.[21]

87 The final instance of alleged prejudgment is found on the next page of the transcript, when Mr Flinkier was referring to the August report on asbestos from Mr Lindberg which Mr O'Donnell had ordered but not paid for. The Member commented:

88 This is hardly prejudgment of the issue. At best for the appellant, it possibly could indicate some sympathy, on the part of the Member, for Mr O'Donnell's predicament.

89 The third ground of apprehended bias and procedural unfairness was that the Member refused to allow the appellant's director, Mr Flinkier, "to present its case fairly" by not permitting him to:

(a) "give all the oral evidence that was relevant and able to be given by him ... in a single cohesive presentation" contrary to s.102(1)(a) of the VCAT Act;

(b) table all of the documents "relevant and supportive of the appellant's case", contrary to s.102(1)(a) of the VCAT Act; and

(c) cross-examine Mr O'Donnell "when it was both necessary and appropriate to do so", contrary to s.102(1)(b) of the VCAT Act.

90 If the allegation that Mr Flinkier was not permitted to give all of his oral evidence in a single cohesive presentation means that he was constantly being interrupted by the Member, then I reject it. I have previously referred to the fact that when it came to Mr Flinkier putting the appellant's case, the transcript shows that he spoke for what has become pages 33 to 36 with virtually no interruption. Then, after some toing and froing, Mr Flinkier spoke from pages 45 to 51, again with very little interruption. At page 68 of the transcript, after Mr O'Donnell had given his evidence about the alleged variation to impose an obligation to make a progress payment of $5,000, Mr Flinkier was again asked by the Member whether he wanted to say anything else by way of final submission, and Mr Flinkier did so.

91 On the other hand, I have already dealt with examples of where Mr Flinkier was stopped from giving evidence about matters or from tendering documents. This occurred whenever Mr Flinkier tried to raise the issue of Mr O'Donnell's lack of registration and the issue of why and by whom the work was stopped, by referring to correspondence from Mr Black and the Council. Therefore, parts (a) and (b) of this ground were made out, in my opinion.

92 Part (c) of this ground was the allegation that Mr Flinkier was not permitted to cross-examine Mr O'Donnell. When Mr Flinkier was referring to his claim that the permit Mr O'Donnell obtained was in somebody's else's name and that he had a letter about this, the following exchange occurred at page 40 of the transcript:

MEMBER: Well, put it to him. Show it ---

MR FLINKIER: Well, I thought I'd get the chance to cross-examine him in the box but you wouldn't ---

MEMBER: I don't do that. This is my tribunal. He gets to talk on oath and you get to talk on oath.

MR FLINKIER: Okay.

MEMBER: You're not there to cross-examine anybody. You're going to tell me your version of events and so is he.

93 Although the first part of this exchange may have simply been the Member rejecting the proposition that Mr O'Donnell had to go into the witness box so that Mr Flinkier could cross-examine him, the second part clearly concludes with the Member's statement that Mr Flinkier was "not there to cross-examine anybody".

94 In answer to a question from me, Mr Moshinsky submitted that as a matter of principle one might well ask whether the objects of cross-examination were in substance achieved by, for example, informal questioning of one side to the other.

95 In fact, this did happen in the present case to a very limited extent. Mr Flinkier did ask about ten or so questions of Mr O'Donnell over the next 30 pages of transcript, including the question about Mr O'Donnell working under Mr Black's name, which Mr O'Donnell denied. However, Mr Flinkier certainly understood that the Member had ruled out cross-examination, because not long after she stated that Mr Flinkier was not there to cross-examine anybody, he said:

May I ask Will, then, if he has - are you a licensed demolisher? Are you?

Rather surprisingly, this question was ruled "not relevant" by the Member because Mr O'Donnell "had a contract" with Leon Holdings to demolish its building.

96 Most of Mr Flinkier's questions occurred towards the end of the hearing when it degenerated into a verbal battle between Mr Flinkier and Mr O'Donnell. I do not consider that this disjointed, argumentative and limited exchange between the two men constituted the type of cross-examination of a witness permitted by the VCAT Act. And even then, Mr Flinkier was stopped by the Member from questioning Mr O'Donnell further when she said:

Please, gentlemen. There's no point in you talking to each other. Will you address your comments to me.

97 In my opinion, nothing said in s.98 of the VCAT Act overrides the clear mandatory statement in s.102(1)(b) that the Tribunal must allow a party a reasonable opportunity to cross-examine a witness.[22] Although the Tribunal "may regulate its own procedure" (s.98(3)), that power is expressly "subject to this Act". The ability to conduct the proceeding with little formality and technicality (s.98(1)) is also expressed to be subject to "the requirements of this Act".

98 Although permitting cross-examination would have increased the length and formality of the hearing,[23] the obligation on the Tribunal was to allow Mr Flinkier "a reasonable opportunity" to cross-examine Mr O'Donnell. Since the outcome of the proceeding was heavily dependent on the assessment of the credibility of the conflicting evidence given by Mr O'Donnell and Mr Flinkier, in my opinion, a short but orderly cross-examination of Mr O'Donnell, and of Mr Flinkier if Mr O'Donnell wished to exercise his right, should have been allowed.[24] The disjointed and limited questioning by Mr Flinkier was no substitute for his statutory entitlement. As Brennan J said, in delivering the opinion of the United States Supreme Court, in Goldberg v Kelly:

In almost every setting where important decisions turn to questions of fact, due process requires an opportunity to confront and cross-examine witnesses.[25]

99 Matters which Mr Flinkier no doubt wished to cross-examine Mr O'Donnell about included whether he was a registered demolisher; in whose name the building permit had been obtained; the role played by Mr Black in obtaining the building permit; why the demolition was not completed within a few weeks after Christmas; how much income Mr O'Donnell had received from his initial salvage of materials; the terms of the alleged variation of the contract to require a progress payment of $5000; when that variation was agreed; why the demolition work was stopped; when any asbestos was removed from the site and when the various tax invoices were sent to him. In my opinion, Mr Flinkier did not have "a reasonable opportunity" to test by cross-examination the credibility of Mr O'Donnell's evidence about these matters.

100 One final matter should also be mentioned. This was the allegation by Mr Flinkier in his first affidavit that the Member had given legal advice to Mr O'Donnell and thereby shown that she was not impartial. Although this is not strictly raised by any of the grounds of appeal, I consider that it should be dealt with. It was clear that this complaint related to the Member's explanation to Mr O'Donnell of her concerns about the splitting of his claims and the advantages and disadvantages of the alternative ways of proceeding.

101 In my opinion, this criticism of the Member is unwarranted. As I have mentioned above, a serious issue was raised by the manner in which Mr O'Donnell had structured his claim against Leon Holdings. It was imperative that both parties understood the problem and the advantages and disadvantages of the alternative ways of proceeding. As they were not represented by lawyers, it fell to the Member to explain all of this to the parties. I do not read what the Member said as constituting legal advice to Mr O'Donnell. Rather, it is properly characterised, in my opinion, as an explanation to both parties about procedural matters.[26]

102 Nevertheless, although judges and members of tribunals have a positive duty to give proper assistance to litigants in person, it is important that both parties are treated fairly, regardless of whether the other party is represented or not. Otherwise, there will be a perception that the judge or member is biased.

103 In Tomasevic v Travaglini,[27] Bell J conducted an exhaustive analysis of the relevant authorities concerning the trial judge's duty to assist self-represented litigants. His Honour then summarised the principles as follows:

The matters regarding which the judge must assist a self-represented litigant are not limited, for the judge must give such assistance as is necessary to ensure a fair trial. The proper scope of the assistance depends on the particular litigant and the nature of the case. The touchstones are fairness and balance. The assistance may extend to issues concerning substantive legal rights as well as to issues concerning the procedure that will be followed. ...

The judge cannot become the advocate of the self-represented litigant, for the role of the judge is fundamentally different to that of an advocate. Further, the judge must maintain the reality and appearance of judicial neutrality at all times and to all parties, represented and self-represented. The assistance must be proportionate in the circumstances - it must ensure a fair trial, not afford an advantage to the self-represented litigant.[28]

104 As most of the Member's comments were directed towards Mr O'Donnell, Mr Flinkier may unfortunately have gained the impression that what was being said by her was for Mr O'Donnell's benefit alone. It was not. The procedural explanation would have been intended to provide information to both parties. Even the Member's explanation to Mr O'Donnell about how an order of the Tribunal was enforced[29] would have assisted Mr Flinkier's understanding of the legal consequences of an unfavourable order of the Tribunal.

105 Therefore, in my opinion, the Member did not depart from the reality and appearance of neutrality. At no stage did she become an advocate for Mr O'Donnell.

106 In the reasons set out above, I have concluded that the appellant has made out its case with respect to the two erroneous findings of law and some of the grounds of apprehended bias and procedural unfairness. Accordingly, the order of the Tribunal must be set aside and the proceeding remitted to the Tribunal, differently constituted, for rehearing according to law.

[1] The present situation is to be distinguished from that in Lookart v Joel Auctions Pty Ltd [2004] VCAT 2189, where three applications in respect of three purchases of three different paintings were combined into the one points of claim and heard together. On the question of whether costs could be ordered, Judge Jones held at [63]-[64] that two of the applications were "small claims", and therefore that costs could only be ordered in the third claim.

[2] R v Australian Broadcasting Tribunal, Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13, 35.

[6] Sixth Edition, Oxford University Press 2007.

[7] (1973) 47 ALJR 586. Walsh J agreed with Mason J.

[8] (1973) 47 ALJR 586, 594.

[9] (1973) 47 ALJR 586, 594-5.

[14] Wright v VCAT [2001] VSC 35, [70] (Gillard J).

[15] Collection House Limited v Taylor [2004] VSC 49, [20] (Nettle J).

[16] See, for example, Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, [11] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJA); Ebner v The Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337, [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

[17] Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, [53]. Citations omitted.

[18] The transcript consists of 73 pages.

[19] Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, [13] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[20] Ebner v The Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337, [7] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

[21] Minister for Immigration v Jia Legeng (2001) 205 CLR 507, [72] (Gleeson CJ and Gummow J).

[22] See s.45(2) of the Interpretation of Legislation Act 1984 for the statutory construction of the word "shall". See also Grunwick Processing Laboratories Ltd v Advisory, Conciliation and Arbitration Service [1978] AC 655, 690 (Lord Diplock), 698 (Lord Salmon).

[23] National Companies and Securities Commission v News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296, 314 (Gibbs CJ).

[24] City of Brighton v Selpam Pty Ltd [1987] VicRp 5; [1987] VR 54, 61 (Vincent J); Palmer Tube Mills (Aust) Pty Ltd v Semi [1998] 4 VR 439, 452 (Brooking JA, with whom Tadgell and Buchanan JJA agreed).

[26] Collection House Limited v Taylor [2004] VSC 49, [27] (Nettle J).

[27] [2007] VSC 337.

[28] [2007] VSC 337 [141]-[142].

[29] This explanation was given in response to Mr O'Donnell's observation that, if successful, he wanted payment by a bank cheque "by tomorrow".